The OFT report comes to some pretty damning conclusions about the payday loan industry, revealing that half of its revenue is earned from
rollover loan, and there are also concerns over lenders failing to carry out proper affordability assessments.
One of the biggest limits to the
rollover loan described above is that the participant has use of the money for no more than 60 days.
This will include about $8.7bn project loans, $4.2bn programme loans (mostly from the World Bank and the Asian Development Bank), about $14bn of
rollover loans (from Saudi Arabia, the UAE, China, Qatar and Islamic Development Bank) and up to $8bn in commercial loans.
ACE also denied making
rollover loans. "A customer with a delinquent account is not allowed to take out another loan with ACE until the previous loan is paid off," spokesman Eric Norrington insisted.
The advice from CAB is very clear: "If you have got into debt, avoid
rollover loans. Come and see the CAB for free, confidential advice on how to cope.
Ms Lewis, 60 - believed to be on PS60,000 a year - said the payday lending industry has "very bad practices", such as
rollover loans, yet she is against a crackdown.
Reiterating comments made in her April 2 testimony before the Subcommittee on Financial Institutions and Consumer Credit, Fox said provisions offered in the bill, including repayment plans and a ban on
rollover loans, have already proven ineffective in states where they have been attempted.
(
Rollover loans are not legal in New Hampshire state, but critics claim they occur anyway.)
A fast-growing, lucrative industry will continue to prey on low-income and vulnerable citizens by charging exorbitant interest rates and offering
rollover loans that can bury borrowers in debt.
Mr Mayo also called for a ban on
rollover loans, where people are lent more money before they've paid their current loan.
